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These excerpts taken from the ICI 6-K filed Mar 14, 2006. Strategic progress in 2005 Overall, 2005 has been another satisfactory year with ICI making further incremental progress towards its strategic plan targets, first set out in 2003. As expected, 2005 was more challenging than 2004, with higher raw material cost inflation and mixed trading conditions having an adverse impact on underlying performance. Despite this, comparable sales growth of 6% compared well with estimated real growth in global GDP of 3.4%* and with the overall trading margin broadly unchanged at 9.5% (2004 9.6%), ICI remains on track to achieve a two percentage point improvement in Group trading margin over the four years of the plan. Taken together with improved capital management, this has helped the Group improve return on capital employed by 0.8%, to 13.5%, and generate positive cash flow before acquisitions and divestments of £170m in 2005 (2004 £82m). ICI’s strategy focuses on actively managing its portfolio in different ways to create shareholder value. Investment in “grow selectively” and “grow aggressively” businesses aims to strengthen their competitive positions and open up new market opportunities. Alternatively, investment in “maintain selectively” and “maintain aggressively’’ operations should improve returns on capital, margin and cash flows whilst improving market positions where possible. Overall, comparable sales growth for businesses which ICI intends to “grow aggressively” was over 7% in 2005, compared with sales growth in the “maintain selectively” segment of 3%. Restructuring and other cost and capital efficiency projects contributed to margin improvements in every quadrant except “maintain aggressively” where progress was held back by high raw material costs and the increased manufacturing and energy costs at National Starch’s US starch operations. ICI continued to invest preferentially in its “grow aggressively” businesses. Capital expenditure was again in excess of depreciation as the businesses invested in growth opportunities. National Starch opened a strategically important new technical and manufacturing centre for Electronic Materials in China, and ICI Paints started *Source: Oxford Economic Forecasting December 2005. Strategic progress in 2005 Overall, 2005 has been another satisfactory year with ICI making further incremental progress towards its strategic plan targets, first set out in 2003. As expected, 2005 was more challenging than 2004, with higher raw material cost inflation and mixed trading conditions having an adverse impact on underlying performance. Despite this, comparable sales growth of 6% compared well with estimated real growth in global GDP of 3.4%* and with the overall trading margin broadly unchanged at 9.5% (2004 9.6%), ICI remains on track to achieve a two percentage point improvement in Group trading margin over the four years of the plan. Taken together with improved capital management, this has helped the Group improve return on capital employed by 0.8%, to 13.5%, and generate positive cash flow before acquisitions and divestments of £170m in 2005 (2004 £82m). ICI’s strategy focuses on actively managing its portfolio in different ways to create shareholder value. Investment in “grow selectively” and “grow aggressively” businesses aims to strengthen their competitive positions and open up new market opportunities. Alternatively, investment in “maintain selectively” and “maintain aggressively’’ operations should improve returns on capital, margin and cash flows whilst improving market positions where possible. Overall, comparable sales growth for businesses which ICI intends to “grow aggressively” was over 7% in 2005, compared with sales growth in the “maintain selectively” segment of 3%. Restructuring and other cost and capital efficiency projects contributed to margin improvements in every quadrant except “maintain aggressively” where progress was held back by high raw material costs and the increased manufacturing and energy costs at National Starch’s US starch operations. ICI continued to invest preferentially in its “grow aggressively” businesses. Capital expenditure was again in excess of depreciation as the businesses invested in growth opportunities. National Starch opened a strategically important new technical and manufacturing centre for Electronic Materials in China, and ICI Paints started *Source: Oxford Economic Forecasting December 2005. | EXCERPTS ON THIS PAGE:
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